Mutually exclusive projects occur when
A) projects have uneven cash flows.
B) more than one firm can use the projects.
C) a set of investment proposals perform essentially the same task.
D) projects are independent.

Question

Quizplus · Accepted Answer

Mutually exclusive projects are investment proposals that perform similar tasks and are therefore mutually exclusive. This means that selecting one project automatically eliminates the possibility of selecting the other. Examples of mutually exclusive projects include building a highway versus a railway or selecting a new machine versus repairing an old one. Uneven cash flows, multiple firms using the same projects, or independence of projects do not necessarily result in mutually exclusive projects.

Mutually Exclusive Projects Occur When